If you file for Chapter 13 bankruptcy, your case will most likely last between three and five years, depending on the length of your repayment plan. But there are some instances when your Chapter 13 case will fall outside this standard three to five year period.
In Chapter 13 bankruptcy you repay some or all of your debts through a repayment plan that lasts from three to five years. You make monthly payments to a Chapter 13 trustee, who distributes the money to your creditors according to your repayment plan. (To learn more, see The Chapter 13 Repayment Plan.)
For the most part, your Chapter 13 case will last about as long as your repayment plan length. Usually when you complete your plan, you get your discharge soon thereafter.
Your annual income determines whether your Chapter 13 plan will last three or five years. If your gross household income is below your home state's median income for your household's size, then you are only required to have a three year plan. However, if your gross income is above the state's median income, then you are required to propose a five year repayment plan.
One exception to the required minimum is if you are paying your creditors back in full. In that instance, your case can be shorter than the required time length, because once the creditors are paid in full, there is no one left to pay, and therefore your case is complete.
Many debtors who file Chapter 13 qualify for a three year plan, but choose to use a five year plan instead. The reason is that there are required payments you must make in a Chapter 13 bankruptcy. By opting for a five year plan, you can spread those payments out over an additional two years, which will make your monthly plan payments lower.
There are some instances when you can end your bankruptcy case earlier than the confirmed plan length.
If you dispute a creditor's claim (for example, you disagree that you owe the debt, or disagree on the amount the creditor says you owe) you will litigate the dispute in bankruptcy court. A lawsuit in bankruptcy court is known as an adversary proceeding. An adversary proceeding, like any lawsuit, may go on for years, especially if the matter is appealed. If the litigation takes longer than your plan length, you will likely have to continue to make payments to the trustee for the amount in dispute only. The plan will continue so that you can make these payments and the trustee will hold the money until the court resolves the dispute. This means that your Chapter 13 bankruptcy case can last longer than five years
There are other factors that can extend the length of your case, but not your plan. Examples include:
Trustee's final report and accounting. Once you complete the plan, the trustee must file a final report and accounting of all the money you paid and how the trustee distributed that money. The trustee's audit may take a couple of months to complete and file.
Certificate regarding domestic support. Before you can receive your discharge, you must file a certificate stating that you either do not owe any domestic support or are current on your domestic support obligations. If you complete your plan payments, but fail to file the certificate, then your case will continue until you file it.